Paper-hungry secondary players excitedly await allocations on Scotts, Dobson

By Sara Rosenberg

New York, Oct. 9 - The upcoming allocations of The Scotts Co.'s $1.2 billion credit facility and Dobson Communications Corp.'s $700 million credit facility are highly awaited events in the secondary bank loan market as many continue to feel constrained by investors' reluctance to sell due to the lack of new paper available and a relatively light pipeline of new deals.

"There's not a lot. We've been actively trading our own names but it's hard to get anything done in the broadly syndicated market. We're looking at a Dobson allocation hopefully next Tuesday and Scotts should allocate tomorrow or Monday. These are eagerly anticipated events. There are a lot of hungry mouths to feed," a trader told Prospect News.

This sentiment has been repeated time and time again in recent times as traders continue to see strong bids in the market but few sellers, leading to light volume on the trading desks.

Scotts' facility consists of a $550 million five-year revolver and a $650 million term loan B, with price talk on both tranches in the Libor plus 225 basis points area. JPMorgan is the lead arranger on the deal.

Proceeds from the credit facility and a high-yield bond offering will be used to finance a tender offer for the company's $400 million outstanding 8.625% senior subordinated notes due 2009.

Scotts is a Marysville, Ohio supplier of lawn and garden care products.

Dobson's facility consists of a $550 million 61/2-year term loan B talked at Libor plus mid-300's basis points and a $150 million six-year revolver at Libor plus low-300's basis points. Lehman Brothers and Bear Stearns are joint lead arrangers and book managers on the deal, and Morgan Stanley is an underwriter as well.

Proceeds from the bank facility and a bond offering will be used to refinance and replace outstanding borrowings under the existing credit facilities, to fund the repurchase of Dobson/Sygnet Communications Co.'s 12¼% senior notes and to fund the repurchase of a portion of the outstanding 12¼% senior preferred stock.

Dobson is an Oklahoma City provider of rural and suburban wireless communications services.

Along the lines of new paper, IESI Corp.'s $350 million credit facility allocated and broke for trading on Thursday, with the $175 million seven-year term loan B immediately moving up from its original offer price to institutional investors of par during syndication to trade around 101, according to a trader.

The institutional tranche carries an interest rate of Libor plus 350 basis points.

Fort Worth, Tex.-based IESI also obtained a $175 million five-year revolver with an interest rate of Libor plus 325 basis points.

Fleet acted as sole lead arranger and administrative agent on the deal for the non-hazardous solid waste management company. LaSalle acted as syndication agent for the loan.

Proceeds from the facility will be used to refinance existing debt and help fund an acquisition.

In follow-up news, Beverly Enterprises Inc.'s $150 million term loan flexed down to Libor plus 325 basis points from Libor plus 350 basis points earlier this week as over $500 million in commitments flooded into the book, according to a source close to the deal.

Furthermore, the institutional tranche now contains a grid that will take pricing down an additional 25 basis points to Libor plus 300 basis points depending on the company's senior secured leverage.

As for the $75 million revolver, which carries an interest rate of Libor plus 325 basis points, its "fully subscribed" as well, the source said.

Allocations on the $225 million senior secured credit facility (Ba3/BB) may take place towards the end of next week, the source added.

Lehman Brothers is the lead bank on the deal for the Fort Smith, Ark. provider of healthcare services to the elderly.

The company plans to use proceeds from the credit facility, combined with proceeds from a proposed $100 million subordinated notes offering, to pay existing indebtedness, including $180 million of its senior notes due 2006.

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